November 13, 2009
The Incredible Shrinking Law School?
Posted by Erik Gerding

I've gotten some responses to my earlier post on the "Death of Big Law School."

At Ideoblog, Larry Ribstein, who prompted my initial post with his paper on "The Death of Big Law," pointed to his own conclusions on what the pressures on big law firms means for legal education (p, 34-5 of his paper), including:

   a. Law firms that invest in their own R&D may seek lawyers with greater interdisciplinary training.

b. There will be a greater separation between high and low end law practices which will drive a separation between tiers of law schools.

As to the first point, other scholars, like George Triantis, agree that big law needs to invest in R&D. But with few exceptions, this hasn't happened yet. The answer to "why not" deserves its own discussion.

But Larry's first point for legal education - that some law schools will still have wide curricular offerings that aim at producing the best lawyers in "year 10" not just the best lawyers on "day one" is very interesting. The problem is that many faculties will still be under enormous pressure to demonstrate that the "law and . . . " courses actually provide this value. It is a tough case to make, not because there is no merit to the argument, but because the benefits are indirect and may take years to be realized. (Years into practice, I still found myself remembering something from law school and saying "so that's what the professor was talking about"). Moreover, many law professors recoil at the thought of justifying what they do in the classroom in these terms.

Larry's second point that there will an increasing separation among law schools in consistent with my predictions. But even the Yales of the law school world are not immune from the economic pressures he and I describe. Much of the expansion by the higher ranked schools was enabled by heady gains by university endowments (not just donor largesse or high tuition made possible by law firm hiring). Until (or unless) the salad days for endowments come back, the pickings at the salad bar for the top law schools will be slimmer.

Many commentators in other blogs have predicted law schools will shrink enrollments to respond to economic pressures. Not in the short term; as some have noted, many school are increasing enrollment - even Yale! Some of this stems from higher matriculation of accepted applicants in a slow economy. Some of this may stem from a move to increase tuition revenue to replace lost income from endowments, donors, and legislatures. If the market for graduates does not significantly improve in two years, are we heading for a collective train wreck of oversupply?  Some would say we are there already.

Let me push some of the points in Larry's paper even further.

First, the "Death of Big Law" is not restricted to the top 20 firms in NY, Chicago, and L.A. Some of the same pressures are being felt by law firms in much smaller markets. Accordingly, expect that the economic pressures on those law schools whose graduates enter smaller markets will also increase. Moreover, graduates of those schools will face increasing competition from graduates of big name schools who are themselves looking for alternatives to bleaker job prospects in the bigger markets.

Second, in his paper, Larry focuses primarily on the challenges provided by the dynamics internal to law firms. But law firms may face continued external pressure by a sustained drop in demand for their services. Larry recognizes this, but it bears continued discussion. We can't continue to operate under the assumption that, in law, supply creates its own demand. (Recall the old joke about there not being enough business in town for one lawyer, but . . .) Like healthcare, there are still limits to the demand for law. Note that declines in transactional practice billing are particularly tough on big firms. Litigation practices are often loss leaders.

Perhaps most of my predictions will turn out overly pessimistic. But the overall point, that law faculties need to start thinking about these long term pressures remains. Even professors who don't care about big law firms should consider what their fate means for our profession. Think about Larry's paper. Read Bill Henderson's analyses of the profession and legal education. A lot of industries and institutions are under enormous competitive pressure, including many like newspapers and universities with important functions other than generating a profit. Law schools will be no different.

Many commentators to my post have noted that some of the sacred cows of law school may fall victim to this particular economic crisis - such as the three-year law school, tenure, and the monopoly (in most states) of graduate legal education as gateway to the bar. We may already be feeling the foreshocks of these trends.

Happy Friday.

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